WestGate Attackers: In Their Minds..

westgate 8As the gunfight between the Kenyan forces and the Westgate attackers entered into day three, questions lingered on every Kenyan’s mind on just what was their objective in the attack. Several theories were advanced from day one of the attack in an effort to try and explain the demands of the attackers. However, all theories seemed to be pointing to one direction; the al-shabaab was to blame.

Despite the al-shabaab claiming that they were the ones behind the attack; the way the whole terror operation was planned and executed seem to point out too that some established terror group must had been the perpetrators. The al-shabaab also went ahead to release names of the attackers in the mall and revealing their nationalities; information which seemed to tally with the reports from the Kenyan forces flushing them out of the mall.

Whoever they are, the attackers must have done enough homework to map out the whole mall beforehand. The swiftness and exactness with which they entered the mall and started shooting at innocent civilians and guards is enough evidence to that. Knowing the various locations in the mall to hide in and escape from the pursuing Kenyan forces for two days requires substantial amount of time in planning and surveying of the battle field.

The timing, location and the period of time for which the attack was sustained by the attackers are also important factors to consider.

Just as the world was celebrating the world peace day, the attackers launched the assault. What a better way is there for a terror group to shout out their presence to the world than by attacking when least expected!

It was also a weekend when the big rugby tournament the Safaricom 7s was taking place and the city could be full of people all westgate 7hyped up for fun over the weekend. Again, what better time is it to strike and get maximum attention than when you surprise excited masses with sudden bad news?

 And finally, it had to be on a Saturday, a day off for many people to go out and have fun with friends and families. Disrupting their fun moments would inflict to them much pain than just attacking them on a normal working day.

A children’s function was happening at the mall too on the day of the attack. We all know that children and women draw a lot of sympathy from everyone when they get hurt. The attackers may have capitalized on that to attract more attention and for a prolonged time from us the citizens who sympathize with the hurt children and women. Continue reading “WestGate Attackers: In Their Minds..”

WestGate Attack: The Economics..

westgate 2The terror attack at the Westgate shopping mall in Nairobi on 21st September 2013 was one unfortunate unfolding that caught everyone unawares. Such acts of cowardice should be condemned strongly and the perpetrators brought to book and justice be done to the victims. However there is another angle of looking at the whole scenario; just what is the financial and economic implication of this unfortunate attack?

Micro-effects:

One direct loss is to the business owners in the mall. With the kind of shootings and explosions that were in the mall, it’s obvious that property of undoubtedly high value has been destroyed in the process. This leaves the business owners with huge unprecedented expenses to factor into their books of account for this financial year.

Talking about insurance, the insurers of the mall and the businesses therein have a heavy task ahead. Insurance against terror attacks having been introduced to Kenya recently, probably most firms had not subscribed to it thus making it difficult for them to get compensation. If on the other hand they had taken the terror cover, the burden lies with the insurance companies to compensate them fully.

Many other businesses around the area have been closed down throughout the period when these attacks were continuing. This results to loss of business to the other firms, and a loss to be factored into their books of account too. Casual workers who rely on their wages from the businesses closed also might be suffering due to loss of their only source of income.

People have been killed with the death toll at 69 confirmed deaths and 175 casualties in hospitals as on Monday 23rd September 2013. Most of those injured are adults some of whom were bread winners in their families. With their passing-away or for the injured for as long as they remain incapacitated to work, the sources of income for their families have been cut. This brings about a dependency situation that was not planned for into the lives of their relatives and friends.

Macro-effects:westgate 1

On matters international trade, the terror attack was swiftly followed by a travel advisory by the US government to its citizens. UK have not issued one yet, but with a rugby team from the country that was meant to participate in the Safaricom 7s packing and going back without playing, the stand of the country can be read in between the lines. The unfortunate result of such negative moves is that our tourism industry may be affected which is a key source of foreign income to Kenya.

NSE is still open but again the foreign investors would be keen on the developments of the terror attack. The most expected move would be reduced activity at the bourse with majority of foreign speculators at the bourse selling-off their stakes. That would eventually pull down the indices, an indication of falling share prices. Continue reading “WestGate Attack: The Economics..”

Kenya’s Economic Overview – 2013

Kenya entered 2013 from an improving economic position with low inflation and stable interest rates. By end-February, inflation was down to 4.5%, from a high of 18% in early 2012, and the shilling remained stable (at Sh85=US$1) against major trading currencies. This enabled the Central Bank to lower interest rates to 9.5%, compared to a peak of 20% in mid-2012.

Peaceful national elections in March 2013 and a smooth transition of power renewed  business confidence, strengthening prospects for the economy to achieve a growth rate of five percent in 2013, compared to 4.3% in 2012.

But Kenya is still underperforming its peers and the economy remains out of balance with sharp differences in sectoral performance, says the latest World Bank economic analysis. Macroeconomic management, the financial sector and the Information and Communications Technology (ICT) sectors remain very strong, but the port of Mombasa and agriculture are weak, says the Bank analysis in February 2013, which builds on the key findings of the Bank’s December 2012 Kenya Economic Update.

The economy remains vulnerable to external shocks, as the current account deficit is above 10% of gross domestic product (GDP), despite global fuel prices moderating in recent months. Service exports have increased but goods exports remain weak. Short-term capital inflows have helped stabilize the exchange rate, but heightened vulnerability to external shocks. Moreover, the real exchange rate is 34% stronger than a decade ago, constraining economic competitiveness.

Growth in 2013 will mainly be driven by recovery in agriculture and more stable energy supplies due to good rains, compensating a slowdown in tourism. Energizing Kenya’s export engine will be key to creating jobs for the 800,000 Kenyans who enter the labor force every year. Bank analysis shows that Kenya is undergoing a long-term shift out of family farming, with less than half of working Kenyans being engaged on family farms today compared to two-thirds two decades ago.

With the formal sector creating only 50,000 jobs, most jobs will need to be generated by the informal sector. Stronger job growth, the Bank says, will result only if Kenya improves infrastructure and business climate environment for export industries and boosts household productivity by accepting informal businesses as legitimate parts of the economy.

The Bank urges the new administration to focus its policy on several key areas, including social equity, quality education and better management of water resources to reduce vulnerability. Enhancing competitiveness through macroeconomic and political stability, infrastructure expansion (energy, roads, port and rail services) and overhaul of the state monopoly on maize and cereals sector is also critical.  Moreover, the new administration should strengthen institutional reforms in devolution, judicial transformation and public financial management. 

Kenya should also maintain prudent macroeconomic performance and improve its growth rate closer to the average of its peers in Africa and East African Community (EAC), whose growth averages of 5.3% and six percent respectively. It should reduce non-tariff barriers to trade to benefit from emerging trade and investment opportunities in the EAC to improve its food and energy security.

courtesy: World Bank

 

The Week That Was…

BHG20 Tax Information Sharing Deal Struck.

The G20 countries agree on tax information sharing in order to curb tax evasion by large international corporates who rely on differences in tax laws to shift their investments to various countries in order to evade tax.  There is a proposal of having profits being taxed in the country where economic activities that produced the profits were carried out. Plan scheduled for full implementation by 2015.

BRICS $100B Contingency Fund Plan Unveiled

The countries that form part of the BRICS i.e. Brazil, Russia, India, China and South Africa unveiled their plan to form a contingency fund of $100B in order to cushion their economies in times of global financial declines. This comes even as news on the plan by the US on tapering its monthly internal borrowing of $85B is predicted to cause economic shake-ups in the developing nations due to capital flight. The BRICS and especially India face the full wrath of the tapering.

G20 Summit Held at Saint Petersburg in Russia

G20 leaders met at Saint Petersburg on Thursday last week. The main theme was on the global economy but matters Syria dominated most of the informal meetings; with the President Obama lobbying for more countries to support it in its bid to have a military intervention to what is termed as “Syria’s government use of chemical weapons on its own citizens.”

Others:

        I.            South Africa Gold Strike Ended

      II.            EU Court annulled sanctions placed on Iranian firms previously alleged to be supporting the nuclear weapon projects in Iran.

    III.            Uwezo Fund was launched in Kenya to give credit to youth and women groups to enable them take part in their 30% share of all government tenders worth about Ksh. 200B.

    IV.            Kenyan Legislatures at the Parliament passed a motion to detach Kenya from the Rome Statute; stating that the ICC court is “a political tool meant to suppress the African continent and its leaders.”

      V.            Nairobi County Governor Dr. Kidero slapped the Nairobi County Women Representative at his office in before media cameras when the latter stormed his office with a huge mob to protest with city council workers.

    VI.            Nairobi County Senator used abusive words against Caroline Mutoko a seasoned radio presenter at KISS100 in a morning show where he accused her and Chipukizi for interfering with his private family life.

Uwezo Fund – #KenyanYouths

anne waiguru website officeJust as promised, the government has finally set aside ksh. 6 billion for distribution to various women and youth groups across the country to provide seed capital for start-ups. Big money it is and no one should be left out in this.

The government has further promised that 30% of all government tenders should be allocated to women and youth groups in Kenya. This does not sound tantalizing till you get to know that we are talking of a whooping ksh.200 billion being channeled to our local youth groups and women chamas.

The Uwezo Fund is meant to create the capacity in the youth and women groups to enable them to be stable enough to bid for the government tenders.

The loans from the Uwezo Fund shall carry a one off 3% administrative charge and no other interest shall be charged on it. A group can borrow as much as ksh. 500,000 depending on the size of their business plan.

To access the fund, the group shall be required to write a good business plan and forward it to the constituency committee for vetting and if they qualify, they get the cash.

Compared to what the Youth Fund used to offer; a loan of ksh. 50,000 to a group of at least 12 youths, this seems to be much better considering that the capital base has been widened to a higher limit of ksh.500,000.

However, controversy has been raised on the adoption of the constituency framework to distribute the cash to the youth and women groups’ country wide bearing in mind the height of corruption in those constituency committees. In a show of transformation, the constituency committees shall be having one representative for the youths and women as well as have the MP sitting in them to try and bring in transparency.

It’s time for that business idea you have been sitting on to get some funding and be transformed from just an idea in your mind to an actual running business. Write a business plan; na ujitegemee!

Diaspora Remittance – June 2013

cbkA remittance is money sent by a person in a foreign land to his or her home country. Due to the huge sums involved, remittances are now being recognized as an important contributor to the country’s growth and development.

The Central Bank of Kenya conducts a survey on remittance inflows every month through the formal channels that include commercial banks and other authorized international remittances service providers in Kenya.

Commentary on Remittances for June 2013

In the month of June 2013, remittances to Kenya declined by 9.4 percent (or USD 10.34 million) to USD 99.81 million from USD 110.15 million recorded in May 2013. The reduction of remittance inflows was mainly in a USD 9.53 million decline from the North American region. However, when compared to a year ago, remittance inflows in June 2013 record a marginal increase of 0.32 percent.

The 12 month cumulative inflows increased by 10.89 percent to USD 1,199 million in the year to June 2013, while the 12 month cumulative average inflows increased to USD 99.9 million in June 2013 from USD 90.1 million in June 2012. The flattening of the 12 month cumulative average flows reflects resilience in the monthly remittance inflows (Table 1 and Chart 1) since January 2013.

Remittance Inflows by Source Market

In the month of June 2013, the share of remittances from North America was 48.2 percent compared to 52.3 percent in May 2013. Remittances from this region declined by 16.54 percent to USD 48.08 million in June 2013 from USD 57.61 million in May 2013. However, the share of remittance inflows from Europe and the Rest of the World increased to 28.3 percent and 23.5 percent in June, 2013 from 26.3 percent and 21.4 percent in May, 2013 respectively.

courtesy: CBK

 NAIROBI SECURITIES EXCHANGE (NSE) AND SHANGHAI STOCK EXCHANGE (SSE) SIGN MOU TO FOSTER MUTUAL COOPERATION

nseNairobi, August 12, 2013….The signing ceremony of the Memorandum of Understanding (MoU) between the Nairobi Securities Exchange (NSE) and the Shanghai Stock Exchange (SSE) was held today, at The Sarova Stanley Hotel. The two Exchanges have entered into a collaboration that will benefit the financial services industry in Kenya and the People’s Republic of China.

“We are aware of the NSE’s initiatives to grow the Kenyan economy through the launch of new service offerings that will support Kenya’s plans to become a middle income country by 2030. The SSE is willing to support NSE and its partners towards the development of a vibrant capital market in Kenya that will support Vision 2030.” said Mr. Gui Minjie, Chairman of Board of Governors of the SSE.

“The cooperation between NSE and SSE is an important milestone and a great step towards achieving our vision to be a leading securities exchange in Africa with a global reach.” said Vice Chairman of NSE, Mr. Bob Karina. 

The MoU outlines the Exchanges’ areas for future collaboration that includes training of human capital, technology development, product development, mutual sharing of information and undertaking joint research projects. Mr. Peter Mwangi, Chief Executive of NSE added, “The MoU serves as the basis of the partnership with SSE to position the NSE to attract more investment funds from Asia.”

About the Nairobi Securities Exchange

The Nairobi Securities Exchange (NSE) is the principal securities exchange of Kenya. It plays a pivotal role in the economy through raising capital for businesses, mobilizing savings for investment and improving corporate governance. Besides equity securities, the NSE offers a platform for the issuance and trading of debt securities.

The NSE is a member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA). It is an affiliate member of the World Federation of Exchanges (WFE). 

About the Shanghai Stock Exchange

The Shanghai Stock Exchange (SSE) was founded on November 26, 1990 and commenced operations on December 19, 1990. It is a membership institution directly governed by the China Securities Regulatory Commission (CSRC). The SSE bases its development on the principle of “legislation, supervision, self-regulation and standardization” to create a transparent, open, safe and efficient marketplace.

courtesy:NSE